HomeContributorsFundamental AnalysisAsian Equity Markets Mixed As Traders Digest US Fed, BoJ Left Policy...

Asian Equity Markets Mixed As Traders Digest US Fed, BoJ Left Policy Unchanged

General Trend:

  • Japanese equities rise on gains in financials, markets pare gain after BoJ left policy unchanged
  • Hang Seng underperforms amid broad-based selling and focus on US Fed rate outlook: HK officials see negative trend for Q3 growth after the Q2 contraction
  • Shanghai Property index declines after recent outperformance
  • PBoC utilized 14-day reverse repos for the first time since late June, left rate unchanged
  • There remains speculation that the PBOC may cut the benchmark loan prime rate (LPR) by 5bps on Friday [The LPR will be set monthly on the 20th of each month]
  • Most big Aussie banks now calling for easing by RBA at Oct meeting, comes amid disappointing unemployment rate data
  • RBA Gov Lowe is due to deliver his ‘An Economic Update’ speech on Sept 24th (Tues)
  • New Zealand Q2 GDP above ests, but annual growth rate hit multi-year low; RBNZ due to hold official cash rate decision (OCR) on Sept 25th
  • Yen extended gain after BoJ decision; Commodity currencies underperform amid central bank decisions, data from Australia and New Zealand
  • US/China due to hold working-level trade talks in Washington D.C from Sept 19-20 (Thursday-Friday)
  • China Commerce Ministry (MOFCOM) sometimes holds its weekly news conferences on Thursday’s (generally seen during the European morning)
  • Indonesia and Taiwan Central Banks due to hold rate decisions later today
  • NY Fed to conduct third day of repo operations on Thursday, FOMC cut the Interest Rate on Excess Reserves (IOER) to 1.80% from 2.10% prior (below 1.85% estimate)

Headlines/Economic Data

Australia/New Zealand

  • ASX 200 opened +0.1%
  • (AU) AUSTRALIA AUG EMPLOYMENT CHANGE: +34.7K V +15.0KE; UNEMPLOYMENT RATE: +5.3% V 5.2%E
  • (AU) Commonwealth Bank: Now expects Reserve Bank of Australia (RBA) to cut cash rate by 25 bps at Oct 2019 meeting [follows Australia’s weaker than expected unemployment data in Aug]
  • (NZ) NEW ZEALAND Q2 GDP Q/Q: 0.5% V 0.4%E; Y/Y: 2.1% V 2.0%E
  • (AU) Australia 2019/19 underling cash deficit A$0.7B; Budget balance deficit A$690M v deficit A$4.2B forecasted
  • BKW.AU Reports FY19 (A$) Net 154.6M v 175.4M y/y; Underlying EBIT 310M v 304Me; Cont Ops Rev 918.7M v 785.2M y/y

Japan

  • Nikkei 225 opened +0.5%
  • (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED
  • (JP) Japan Foreign Min Motegi: Want to reconfirm with the US that there will be no additional tariffs placed on Japan automobiles before trade deal is signed – Nikkei
  • (JP) Japan has negotiated with the US to set up 242Kt quota of US beef with lower tariffs – Japan press
  • 4901.JP Guides FY19 health care segment rev ¥510B, op profit ¥44B; targeting by mid-2020s to have Rev of ¥1.0T – Nikkei
  • (JP) Japan Foreign Min Kono: Not aware of any Iranian involvement in Saudi attack
  • (JP) Japan Economy Min Nishimura: Prepared to support small business and farms if needed in light of US trade talks, working to avoid major impact from sales tax hike

Korea

  • Kospi opened flat
  • (KR) Bank of Korea (BOK) Gov Lee: Fed decision to cut rates eases pressure on BOK ahead of rate decision; swine fever not issues to consider yet in monetary policy
  • (KR) South Korea President Moon approval rating falls to 42.8% (record low)

China/Hong Kong

  • Hang Seng opened +0.3%; Shanghai Composite opened +0.2%
  • (CN) China PBoC Open Market Operation (OMO): Injects CNY170B combined in 7-day and 14-day reverse repos v injects CNY30B in 7-day prior; Net drain CNY170B v CNY0B prior
  • (HK) Hong Kong Monetary Authority Chief Chan: Sees downward pressure in Q3 growth citing political unrest and trade war; interest rate level not high in general; USFed cut may not have direct impact on rates in Hong Kong
  • (CN) China has shortened its unified (includes both foreign and domestic investors) negative list for market access – press
  • (HK) Hong Kong Fin Sec Chan: Sees negative trend in Q3 growth – Global Times
  • (CN) China Aug Swift Global Payments CNY: 2.22% v 1.81% prior
  • (CN) China PBOC sets Yuan Reference Rate: 7.0732 v 7.0728 prior
  • (CN) China Ministry of Finance (MOF): Reiterates China tax and fee cut expected to exceed CNY2.0T in 2019
  • 293.HK Cathay Pacific: Nearly 100 employees have been fired due to their participation in Hong Kong protests or their social media connections to Hong Kong protesters – Hong Kong Press
  • 1199.HK Cosco Shipping Ports: Announces disposals of interest in various port assets for ~CNY1.06B to Shanghai International Port Group
  • 178.HK SA SA International: Profit warning, expects turnover to decline by 15%
  • 5.HK Maintains best lending rate at 5.125%; cuts USD savings rate from 0.25% to 0.10% in Hong Kong (following HK cutting base rate)

Other

  • (SA) Saudi Defense Ministry displays remnants of drones used in Aramco attack says it is evidence of Iranian weapons being involved in the attack and Iranian aggression (overnight)
  • (SA) Saudi Arabia Crown prince: Attacks were aimed at destabilizing the region’s security, damaging the global energy supply and the global economy – local press
  • (US) US Energy Dept: Saudi Arabia must forgo uranium enrichment to secure nuclear reactor deal; US is committed to Westinghouse efforts to sell reactors
  • (PH) Philippines Central Bank Chief Diokno: Committed to ‘normalizing rates;’ Negative rates would be tough on pensioners and investment; very comfortable with reserves level

North America

  • (US) FOMC CUTS TARGET RANGE BY 25BPS TO 1.75-2.00% (AS EXPECTED); SUSTAINED EXPANSION LIKELY, UNCERTAINTIES ABOUT ECONOMIC OUTLOOK REMAIN
  • (US) Fed Chair Powell: Fed cut rates in order to provide insurance against risks and to keep US economy strong – post rate decision press conference
  • (US) Fed Chair Powell: if the economy were to turn down, we could potentially see more extensive rate cuts; will continue to monitor developments in markets and outlook – post rate decision Q&A
  • X Guides Q3 -$0.35 v -$0.11e, adj EBITDA $115M (previously declined to guide); expects 2.5K headcount reduction at U.S. Steel Europe
  • (BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 50BPS TO 5.5%; AS EXPECTED
  • (US) New York Fed to conduct a third day of repo operations tomorrow morning
  • (US) Speaker Pelosi to announces briefing related to announcement on drug cost bill for tomorrow

Europe

  • (UK) DUP leader met with Ireland PM Varadkar in Dublin tonight to talk about backstop options
  • (UK) House of Commons Leader Rees-Mogg rejected the idea of suspending Parliament a second time – UK press
  • (UK) Brexit said to have cost 1.0K London finance jobs to date according to analysts, much lower than expected – financial press

Levels as of 1:20 ET

  • Nikkei 225, +0.6%, ASX 200 +0.6%, Hang Seng -1.2%; Shanghai Composite flat; Kospi +0.3%
  • Equity Futures: S&P500 -0.3%; Nasdaq100 -0.5%, Dax -0.2%; FTSE100 -0.8%
  • EUR 1.1041-1.1022 ; JPY 108.47-107.78; AUD 0.6833-0.6781 ;NZD 0.6334-0.6298
  • Gold -0.9% at $1,502/oz; Crude Oil +0.3% at $58.22/brl; Copper flat at $2.612/lb
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